The International Monetary Fund on Wednesday praised India for attempting to lower its “quite high” debt to Gross Domestic Product ratio using the “right policies”, PTI reported. Debt to GDP ratio is the ratio of the government’s total debt to the value of goods and services produced in the country in a year.

“The debt level is relatively high [in India], but the authorities are planning to bring it down over the medium term with the right policies,” Abdel Senhadji, the deputy director of IMF Fiscal Affairs Department, said at a conference in Washington. He added that India’s general government debt was at 70% of the GDP in 2017.

In the 2017-2018 fiscal year, India is “targeting their federal deficit of three percent over the medium term, and they are targeting also a debt ratio of 40% over the medium term at the federal level, which corresponds to about 60% at the general government level,” Senhadji said. “And we believe that those targets are appropriate.”

However, the IMF cautioned other major economies such as China to “avoid policies that increase economic fluctuations”.

“Public debt is currently at historic highs in advanced and emerging market economies. Average debt-to-GDP ratios, at more than 105% of GDP in advanced economies, are at levels not seen since World War II,” Vitor Gaspar, director of IMF Fiscal Affairs Department, said.

The global debt reached a record high in 2016 at $164 trillion, or almost 225% of GDP, Gaspar said. Most of the debt is in advanced and emerging market economies, he added.

Since 2007, just China has contributed 43% to the increase. The overall level of debt is a major challenge for China, the IMF said. “The main concern has to do with the level and pace of accumulation of overall debt, private and public. So, the control over the debt level – in particular, the rhythm of debt accumulation – is a major challenge for the Chinese economy,” Gaspar said.